Britons will spend every penny they earn during the first five months of next
year on taxes, a leading think-tank has calculated.

Tax Freedom Day is the day when Britons begin working for themselves rather than the taxman and falls on May 30 in 2011, compared to May 27 this year, the Adam Smith Institute revealed.

The main reason for the three extra days is the rise in Value Added Tax, which increases from 17.5 per cent to 20 per cent on January 4.

Tom Clougherty, executive director of the Adam Smith Institute, described Britons as being “desperately overtaxed”.

He said: “As well as hitting every household in the country, the VAT hike is going to dent consumer confidence and put a dampener on our economic recovery.”

He added: “The government is right to give priority to cutting spending and plugging the deficit. But as Tax Freedom Day shows, Britons are still desperately overtaxed. The fact that we spend almost five months working for the State – and only seven months working for ourselves and our families – is a shocking indictment of big, wasteful government.”

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Freedom Tax Day has increased six days since 2009, but remains less than the last decade’s peak in 2006 when Britons needed to work until June 4 before they began working for themselves rather than the taxman.